Saturday, April 19, 2008

BusinessWeek.com, with the help of Mountain View (Calif.)-based Altos Research, a real-time housing research firm, ranked 14 of the country's largest cities based on how much sellers have slashed listing prices. At the top of the list is Sacramento, where the median asking price on Apr. 11 was $226,978—a 41% drop from a year earlier, according to Altos.

Just a few years ago it seemed impossible: a home in Sacramento County for under $100,000. But a condominium developer is ready to sell some units at auction Sunday for as little as $85,000...One-bedroom condos were initially listed for $150,000 with three-bedroom units listed at $230,000.

Median home sales prices in Yuba County dipped to $199,000 in March on nearly a third fewer home sales than a year ago, DataQuick Information Systems said....The sales price has declined $90,000, or 31 percent, from March 2007.

Layoffs are spreading to many segments of the area economy. Michael's Furniture, a Sacramento manufacturer owned by struggling retailer Restoration Hardware, eliminated 108 jobs in March, according to state records...National Distribution Centers, a West Sacramento warehouse, expects to lay off 175 workers at the end of April.

11 comments:

Stanislaus County's unemployment rate rose in March to the highest figure it has recorded in five years...The unemployment rate last month, at 11.3 percent, hasn't been that high since February 2003. It is...2.4 percentage points higher than the previous year.

"That is up quite a bit from a year ago," said Liz Baker, an EDD labor market analyst. "It is unusual."...San Joaquin County recorded a similar jump in its unemployment rate, rising to 10.3 percent in March from 8.2 percent last year. Construction jobs were down 1,800 from the previous year, and the financial sector lost about 1,200 jobs.

Exactly like you have been told by the people your entire life - RE is about location, location, location. In a downturn, good areas will perform much better than bad ones. Just look at what is on the market today - many sub-prime fall out from low income/liar loan types that could not afford the $300K nut when the loans adjusted. Simply put, the nice neighborhoods never had a huge influx of these types of people so you don't see huge amouns on REO's anywhere that you would actually want to live.

I think the REO's give people what the want - rather than buying a 'flipper' home 3 years ago which had extensive upgrades (granite, landscaping, hardwood, cherry cabinets) for a smaller home, the market now has much larger homes lacking upgrades and in poor condition at the same price points. There is a large segment of the market which believes 'bigger is better' without looking at the quality of the construction. For these people, this is a great time to be a buyer - these types of properties are also much better as rentals as the owner does not have to look at the low quality construction everyday and can charge more for extra bathrooms and bedrooms. Price have come down - no doubt about it - but the quality decrease in the listed inventory is almost as big.